This decision establishes a $108 million solar incentive program for low-income homeowners as part of the California Public Utilities Commission's (Commission or CPUC) California Solar Initiative (CSI). The program will provide full subsidies for one kilowatt (kW) solar energy systems to existing owner-occupied households that qualify as extremely or very low income, and partial subsidies for solar energy systems to other qualifying owner-occupied low-income homes. Partial subsidies will range from $4.75 to $7.00 per watt depending on the homeowner's federal tax liability and whether the homeowner qualifies for low-income rate assistance. This decision establishes performance and energy efficiency requirements for the program, and directs the Commission's Energy Division to issue a Request for Proposal for a Program Manager to administer the program statewide in the service territories of Pacific Gas and Electric Company (PG&E), Southern California Edison Company (SCE), and San Diego Gas & Electric Company (SDG&E).

The Commission intends to establish a solar incentive program for multi-family low-income housing in a later portion of this proceeding.

1. Background

In Decision (D.) 06-01-024, the Commission collaborated with the California Energy Commission (CEC) to establish the CSI to fund rebates for installation of qualifying solar energy systems for customers of PG&E, SCE, and SDG&E.1 In that order, the Commission committed $2.5 billion over a 10-year period for solar incentives and required that 10% of the funds be used for projects for low-income residential customers and affordable housing projects. In March 2006, the Commission opened a new proceeding, Rulemaking (R.) 06-03-004, to handle the implementation details of CSI, including establishing a low income and affordable housing incentive program. In August 2006, the Commission adopted D.06-08-028 containing implementation details for the mainstream portion of CSI, while details surrounding incentives to low income and affordable housing were set for consideration in Phase II of the proceeding. At the same time, the Governor signed Senate Bill (SB) 12 containing a modified budget and other directives regarding CSI for both the Commission and the CEC. The Commission issued a further order in December 2006 modifying CSI to conform to SB 1. (See D.06-12-033.) Significantly, D.06-12-033 adopted a 10-year total CSI budget of $2.1668 billion and a low-income incentive budget of $216.68 million. (Id., p. 28.)

Also in 2006, the Legislature passed Assembly Bill (AB) 27233 requiring the Commission to ensure that not less than 10% of overall CSI funds are used for installation of solar energy systems on "low-income residential housing," as defined in the bill.

In a February 5, 2007 ruling, the assigned Commissioner set a schedule for consideration of low-income and affordable housing incentive issues. The ruling directed Commission staff to prepare a proposal for an incentive program targeting existing low-income single-family owner-occupied homes, and it directed the CSI program administrators4 to work with interested parties and other knowledgeable persons to design an incentive program targeting existing low-income multi-family housing.5

On April 17, 2007, the Administrative Law Judge (ALJ) issued a ruling requesting comment on an Energy Division Staff Proposal for solar incentives for existing low-income single-family, owner occupied homes. Energy Division held a workshop to discuss its proposal on April 30, 2007.

Comments on the Staff Proposal were filed on May 11, 2007 by A World Institute for a Sustainable Humanity (A WISH), Californians for Renewable Energy, CCSE, the Division of Ratepayer Advocates (DRA), Golden Sierra Power, Greenlining Institute (Greenlining), Grid Alternatives, PG&E, SCE, and SDG&E. In addition, the Energy Division received letters containing substantive comments from the California Department of Community Services and Development (CSD), Global Green USA, and Southern California Forum (SoCal Forum). Reply comments were filed on May 21, 2007 by A WISH, Californians for Renewable Energy, CCSE, DRA, Greenlining, Grid Alternatives, PG&E, SCE, and SDG&E.

The Staff Proposal and comments on specific issues within it are discussed by issue in the sections that follow.

1 The Commission portion of CSI targets solar facilities on existing homes and new and existing businesses. The CEC portion of CSI targets solar installations in the new home construction market, including solar on newly constructed low-income housing.

4 The CSI program administrators are PG&E, SCE, and the California Center for Sustainable Energy (CCSE, formerly the San Diego Regional Energy Office).

5 An Assigned Commissioner Ruling of February 5, 2007 directed the CSI program administrators to jointly file a proposal for a multi-family housing low income incentive program by July 16, 2007. This decision does not address multi-family low-income housing incentives.